Med offices star in commercial world

Higher rents, lower vacancies meant more construction in 2012

Access to featured medical offices

4S Health Center, 16918 Dove Canyon off Camino del Norte, is open Monday through Saturday during regular business hours. Check out the oil paintings of popular rock stars and the small patio and fountain off the waiting room in the lobby.

Sharp Rees-Stealy Medical Center, 300 Fir St., just north of downtown San Diego. A public open house will be held from 10 a.m. to 1 p.m. Saturday, Feb. 2. Be sure to admire the nature photography, the hotel-like lobby and the historic Moreton Bay fig tree on the north side of the block.

San Diego’s commercial real estate market may be stuck in first gear as the economy hobbles toward recovery, but that’s not true of one segment: medical office buildings.

For perhaps the first time in history, 2012 saw more medical space than regular office space added locally — 587,000 square feet compared with 3,887 square feet — according to Colliers International.

That’s in the context of 112.7 million square feet of all office space in the county with roughly 10 percent or 13.6 million square feet labeled as medically related.

And here’s another surprise: The new spaces don’t resemble your family physician’s lairs of old.

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No stark white walls and narrow hallways, windowless examination rooms and plastic tulips in coffee cans. You’ll find the Beatles or pastoral pictures on the walls.

The rise in medical offices owes itself to three basic factors that appeal to developers. Medicine pays higher rental rates, commits to longer term leases and fills up buildings faster, yielding less vacancy over time.

The overall vacancy rate for all medical offices stands at 11.9 percent, while nonmedical is nearly three points higher at 14.4 percent. Medical pays an average $2.82 per square foot per month, nonmedical $2.12 or 25 percent less.

“You certainly get a higher premium on medical, but you’re also including a premium allowance as well,” said Cushman’s medical office specialist, Travis Ives.

Paul Braun, who’s been doing deals on medical office buildings for nearly 20 years at Colliers, said the specialty has grown as doctors and medical groups moved away from hospital campuses and sought highly visible and accessible locations. His colleague, Chris Ross, said the pace may quicken as the federal Affordable Care Act brings more people under the umbrella of health insurance programs.

“The bottom line is medical groups and health systems are in a growth pattern and they tend to put multi-specialty, full-service clinics with ancillary services all under one roof and so they will naturally lease a whole floor or a whole building,” Ross said.

4S Medical Center in 4S Ranch, west of Rancho Bernardo, follows a Mediterranean architectural theme on the outside, a musical theme on the inside.
— Bill Wechter

4S Medical Center in 4S Ranch, west of Rancho Bernardo, follows a Mediterranean architectural theme on the outside, a musical theme on the inside.
— Bill Wechter

Developer Charlie Abdi, a former Koll Co. executive who started Finest City Realty Advisors in 2003, saw a niche waiting to fill and had a family heritage to uphold.

“Both my parents were physicians and there just weren’t a lot of medical buildings built in the 1990s, and there were a lot of rooftops being built,” Abdi said.

His latest project, codeveloped with John White, is 4S Health Center off Camino del Norte, a $12.5 million, 40,398-square-foot building in the 4S master-planned community west of Rancho Bernardo.

Except for the caduceus — the Greek staff of intertwining snakes symbolizing medicine — that’s engraved above the entrance, you wouldn’t know this was a place to get your cavities filled, your cancer zapped or your kids inoculated.

4S Health Center

“Charlie took us to the Grand Del Mar and said, ‘I want it to look similar to this,’ ” Cairns said.

So he took the hotel’s Mediterranean style of columns, arches, tile roofs and window surrounds and fashioned a palace-like presence in suburbia. Interior designer Erica Roman, also from Smith Consulting, brought in Spanish tiles for the floor and stair risers, raised-panel wood doors, dark bronze hardware and wrought-iron railings.

Off the entrance is a waiting room, small patio and fountain — elements rarely seen in medical office buildings — where visitors can pause before they see their physician.

The Beatles figure into the project as one of 21 oil paintings of rock stars.

Sharp Rees-Stealy Medical Center Downtown

Sharp Rees-Stealy adopted a nature theme in its recently opened $22.6 million, 66,365-square-foot medical office building at Third Avenue and Fir Street, immediately south of the clinic’s first building that opened in 1926. A giant Moreton Bay fig, remaining from the block’s previous occupant, the 1884 Florence Hotel, provided the inspiration for designers.

“The fig tree became one of the themes of the project, the tree of life,” said project architect Doug Austin, principal of AVRP Studios.

Architect Pat Nemeth, vice president of facilities for Sharp HealthCare, said the primary drivers for the new facility were the needed integration of electronic records and higher safety and health standards for medical facilities.

“Then we wanted people to feel that they were in a comfortable environment, not a cold, stark environment,” she said. “We use the word ‘hospitality environment,’” she said.

The result is akin to a hotel lobby and atrium: comfortable seating, clear directional signage and pleasant wall art. The project may be first of its kind to win a LEED-Gold designation from the U.S. Green Building Council for its environmentally sustainable features, from photovoltaic cells to xeriscape roof gardens.

“As an architect, my job is to build an environment that takes the fear out of healing,” she said.

Her payoff: A patient recently stopped cold in a hallway, a look of befuddlement on her face. A nurse offered to help.

“No,” said the visitor, “I’m just admiring the art.

Developer Charlie Abdi talks about the concept behind the idea of gracing the walls of 4S Health Center with portraits of music stars. Country musician George Strait is portrayed at right in a painting by David Draime.
— Bill Wechter

Developer Charlie Abdi talks about the concept behind the idea of gracing the walls of 4S Health Center with portraits of music stars. Country musician George Strait is portrayed at right in a painting by David Draime.
— Bill Wechter

Medicine+Music=Commercial edge

Developer Charlie Abdi took special joy in setting a music theme at his 4S Health Center.

Local artistDavid Draime painted 21 oil portraits of popular rock stars — from Stevie Wonder and the Beatles (look for Ringo’s red ring, featured in their movie “Help!”) to Barbra Streisand and Andrea Bocelli. Playing over the building’s intercom system are 3,800 songs uploaded from CD box sets by the artists.

“I started theming buildings with art and music,” Abdi said, and since he’s a baby boomer (and a onetime cello player), he figured aging patients coming to the building would appreciate seeing and hearing some of their favorites.

What if the doctors don’t like Johnny Cash, Nat King Cole or Billie Holiday?

“If they don’t like music, they’re probably not a very good doctor,” Abdi said.

The idea did not appeal at first to Dr. Alberto Bessudo, one of the doctors at the California Cancer Associates, the prime tenant in the building. He preferred nature scenes, but once the paintings were up, he changed his mind.

“I think it’s fantastic,” he said. “Everybody loves the faces, they see the positivity, their ambition and success and accomplishments. It’s not just about a theme of music. It’s a theme that we’re honoring people who accomplished so many things.”

By contrast, Bessudo’s medical space is all about spare succulents on the walls, clean, crisp furnishings and plentiful outdoor light brightening what otherwise might a forbidding, scary place, especially the X-Ray department.

Ferdinand Laco, 48, of Poway was having his blood work analyzed on a recent visit and praised the setting.

“It’s so different from other offices,” he said.

Developer explains operation of X-ray door

Developer Charlie Abdi explains the operation and significance of an 18,000-pound safety door that leads to a linear accelerator X-ray machine at the 4S Health Center.